Thursday, April 13, 2017

This excellent essay by Steve Rhode appeared earlier on the Personal Finance Syndication Network, PFSyncom and on Mr. Rhode's web site titled Get Out of Debt Guy. contains a variety of good advice and information about all manner of consumer debt problems, including student loans. You can learn more about Steve Rodes here.

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A couple of days ago I wrote about
the Trump Department of Education under Secretary Betsy DeVos who told
student loan guaranty agencies with FFEL federal student loans to
disregard the guidance provided by the Obama administration regarding
defaults.

That specific 2015 guidance said student loan debtors who defaulted
had up to 60 days after default to enter into a satisfactory repayment
plan or rehabilitation to avoid up to 16 percent collection fees being
added to their balance on day one of default. The logic was that debtors
who entered such repayment plans were not going to incur collection
fees that warranted adding 16 percent of the student loan balance. Plus
there is underlying guidance to support that position.In a mind blowing twist, the company who was at the
heart of the underlying court case who brought this issue to light, USA
Funds who is now Great Lake Higher Education, said that even though the
Trump administration rolled back the inability to charge the 16 percent
collection fee on day one, they are not going to do it.Great Lakes said, “Since the U.S. Department of Education issued a
Dear Colleague Letter on July 10, 2015, our guarantors have not assessed
collection fees on borrowers who entered into rehabilitation agreements
within 60 days of default on or after July 10, 2015. Notwithstanding
the Education Department’s March 16, 2017, decision, prompted by a
request from a federal judge, to withdraw that Dear Colleague Letter,
the Great Lakes Affiliated Group Guaranty Agencies will continue their
practice of not assessing collection costs on borrowers who agree to
rehabilitate their loans within 60 days of default.” – SourceSo did the DeVos Department of Education even talk to Great Lakes
before falling face first into this? Logically you’d assume they didn’t
since Great Lakes obviously did not want to reverse course on this.My favorite quote on this matter came from Danielle Douglas-Gabriel
with the Washington Post who said, “In light of the Education
Department’s recent action, USA Funds is seeking to dismiss its lawsuit
against the agency.” So not only is the collection company at the heart
of this issue not going to charge the collection fee but they are
dismissing the lawsuit as well. So what was the purpose at all for the Department of Education to
reverse course on this? None I can see. Let me know what you think in
the comments below.Steve RhodeGet Out of Debt Guy – Twitter, G+, Facebook

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About Me

Richard Fossey is a professor at the University of Louisiana in Lafayette, Louisiana. He received his law degree from the University of Texas and his doctorate from Harvard Graduate School of Education. He is editor of Catholic Southwest, A Journal of History and Culture.